Source: AFP
Uncertainty hovered over which major oil producers — known collectively as OPEC+ — would decide on production policy as they headed into virtual meetings on Thursday in a bid to halt the continued slide in prices.
Amid stuttering global economic growth, analysts expect OPEC+ — the 13 OPEC members led by Saudi Arabia and 10 partners led by Russia — to extend or deepen output cuts next year to support prices.
OPEC nations began today’s first meeting via video conference at 10:00 GMT.
Their 10 partners are due to join at around 14:00 GMT to decide on next year’s OPEC+ policy, according to a source close to the organization.
However, during the meeting, disagreement over production quotas remained among the OPEC+ group, which was forced to delay its main meeting by four days.
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It remained unclear whether Saudi Arabia would succeed in persuading African producers to accept lower output targets to further support prices as some members pushed for higher output, sources told AFP.
In recent months, nine OPEC+ members, including Riyadh, Moscow, Baghdad and Dubai, have cut production.
Saudi Arabia bore the brunt of the cuts by voluntarily cutting production by an additional million barrels per day starting in July.
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Fierce negotiations have continued in recent days as Saudi Arabia tried to persuade African countries to join by accepting lower production quotas.
“The dispute with the African members still exists,” a source told AFP on condition of anonymity, saying a decision on their quotas may have to be postponed until next year if a compromise is not reached.
Angola and Nigeria are among those countries reluctant to sign up, seeking to boost production to secure foreign currency, sources said.
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Reversing the latest OPEC+ decisions, as well as deeper cuts by the alliance or by Saudi Arabia alone were still on the table, the source added.
However, DNB analysts said an agreement among OPEC+ to jointly curb output looked unlikely.
Supply cuts
From the end of 2022, the alliance has implemented supply cuts of around five million barrels per day (bpd).
They initially cut about two million barrels in their first face-to-face meeting since the Covid pandemic.
In May they implemented more cuts of nine members totaling 1.6 million bpd.
A month later, Riyadh announced that it was to remove another million barrels from the market, a decision that is being extended every month until the end of 2023 and is being followed to a lesser extent by Russia.
But investors have warned that the output cut may not be enough to prevent prices from plummeting.
Oil prices are far from the peak of $140 a barrel reached after the Russian invasion of Ukraine.
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However, they remain above their five-year average, currently hovering around $80 a barrel after nearly $100 in September.
Concerns among producers remain about a decline in demand due to slowing economies, particularly China — the world’s largest crude importer.
On the supply side, “crude output in the U.S. and Brazil rose to record highs, while OPEC+ members exempt from cuts — Libya, Venezuela and Iran — were also able to increase output,” said Giovanni Staunovo of UBS.
Source: AFP